Amendments dispute kills small business R&D Bill in Senate

Legislation that would give small businesses a bigger share of federal research spending died in the Senate over disagreements on unrelated amendments.

The bill would reauthorize the Small Business Innovation Research program through 2019. Through this program, 11 federal agencies with large outside research budgets award at least 2.5 percent of their R&D spending to small businesses. The bill would gradually increase that share to 3.5 percent, and raise the size limits on the awards.

The legislation also included a compromise on the issue of whether small firms that are majority-owned by venture capital firms should be eligible for SBIR awards.

An administrative law judge ruled in 2003 that these types of companies don’t qualify as small businesses since they aren’t independently owned. Many small biotech firms complained this ruling unfairly knocked them out of the program.

Under the Senate bill, small businesses that are majority-owned by VC firms could receive up to 25 percent of SBIR awards at the National Institutes of Health, the Department of Energy and the National Science Foundation. VC-owned firms could receive up to 15 percent of SBIR awards at other agencies. Despite bipartisan support for this legislation, it failed to get the 60 votes needed to clear a procedural hurdle May 4.

A bigger share

Republicans voted unanimously against the motion to end debate on the bill because they wanted to consider more amendments to the bill.

These amendments included one sponsored by Sen. Olympia Snowe, R-Maine, that would strengthen the law that requires agencies to consider the impact their rules have on small businesses.

“This would have a direct impact, here and now, on the ability of small businesses to create jobs,” said Snowe, who is the ranking Republican on the Senate Small Business and Entrepreneurship Committee. “I am mystified as to why I cannot have a vote on this.”

Committee Chair Sen. Mary Landrieu, D-La., said Snowe’s amendment wasn’t ready for a vote because it is “so far-reaching” and needs to be evaluated by other committees. The SBIR program, by contrast, needs immediate action because its authorization expires May 31.

“Rest assured at some point, we will find a way to get this done,” Landrieu said of the SBIR reauthorization.

The National Small Business Association supports Snowe’s regulatory reform bill, but it wanted the Senate to pass the SBIR bill without it, and then come back to the regulatory reform bill later.

“Countless hours have been spent crafting the Senate’s [SBIR] compromise, and it is a detriment to the program, small businesses and American innovation that it wasn’t approved,” said NSBA President Todd McCracken.

NSBA fears Congress may instead now pass an SBIR bill moving through the House.

That legislation would provide VC-owned firms with a much bigger share of SBIR awards: up to 45 percent at NIH, Energy and NSF; and up to 35 percent at other agencies.

NSBA fears allowing this many VC-owned firms in the program would make the program less effective in helping other types of small businesses.

Rep. Sam Graves, R-Mo., said he expects that bill to pass the House “with broad bipartisan support.”

“We will continue our dialogue with the Senate,” said Graves, who chairs the House Small Business Committee.